Canada OKs First Pipeline to Carry Crude From Alberta to Montreal

The Canadian National Energy Board on Thursday approved a plan by Enbridge Inc. (NYSE: ENB) to reverse the east-to-west flow of crude oil and permit the company’s Line 9B pipeline to transport crude from the oil sands region of Alberta to Montreal. After upgrading, the pipeline will transport up to 300,000 barrels a day to refineries in Montreal and Quebec City.

The 400-mile-long Line 9B pipeline lies entirely within Canada’s borders and runs from Sarnia, Ontario, to Montreal. Enbridge reversed the flow of Line 9A, a 150-mile-long pipeline between Sarnia and Westover, Ontario, last August to transport crude to a refinery in Nanticoke. By delivering crude from western Canada to refineries in the east, the reversed pipeline accomplishes the twin goals of moving more of Alberta’s production to market and breaking the link between Canada’s eastern refineries and more expensive Brent crude.

While Line 9 falls entirely within Canada’s borders, the supply of crude from Alberta does run through the U.S. on Enbridge’s Line 6 system which ruptured in 2010 and spilled more than 20,000 barrels of diluted bitumen into Michigan’s Kalamazoo River.

Enbridge’s is the first pipeline to transport crude to Canada’s eastern ports, but it won’t be the last. TransCanada Corp. (NYSE: TRP) has begun the process of seeking regulatory approval to convert and expand a 2,900-mile-long natural gas pipeline to transport crude from Alberta to the Canadian east coast. Called the Energy East pipeline, it would transport up to 1.1 million barrels a day.

What about TransCanada’s 830,000 barrel-a-day Keystone XL? Or Enbridge’s proposed Northern Gateway pipeline that would transport crude from Alberta to the west coast of Canada? Or the proposed expansion of Kinder Morgan Inc.’s (NYSE: KMI) Trans Mountain pipeline, which the company wants to expand from its current capacity of 300,000 barrels a day to 830,000 barrels a day? Is every one of these going to be built? Probably not, but which one(s) will lose out? That is the interesting question.